I keep hearing about money market funds as an investment option, but I’m not totally clear on what they are. From what I understand, they’re supposed to be relatively safe and provide some interest, but how exactly do they work? Are they similar to savings accounts, or are they more like mutual funds? Also, what are the pros and cons of putting money into a money market fund compared to just keeping it in a high-yield savings account? Would love to hear your thoughts and experiences.
What is a money market fund?
- Thread starter riya
- Start date
Rick_Grimes
Member
A money market fund is a type of mutual fund that invests in short-term, low-risk debt like government bonds or commercial paper. It aims to preserve your money while earning a small return.
robertwilliam
Member
Money market funds represent an investment for mutual funds of money in short-term, high-grade instruments such as Treasury bills, commercial paper, or repurchase agreements. Thus, they provide an opportunity to the investor to keep their capital-safe, liquid, and yet earn interest-a small return.